Reports Q2 Results, Raises Revenue Guidance for Full Year

TYSONS, Va. — (Nasdaq: ALRM) reported a second-quarter profit of $13.8 million after the market closed Aug. 8. The company, based here, reported a profit of 27 cents per share. Earnings, adjusted for one-time gains and costs, came to 40 cents per share.

The results beat Wall Street expectations, with the average estimate of nine analysts surveyed by Zacks Investment Research called for earnings of 32 cents per share.

The company’s total revenue for the quarter increased 16.4% to $121.7 million, compared to $104.5 million during the same period the prior year. Seven analysts surveyed by Zacks forecasted $109.7 million.

SaaS and license revenue increased 16% to $82.3 million, compared to $71 million. SaaS and license revenue includes Connect software license revenue of $11 million, compared to $10.2 million. The company said its SaaS and license revenue renewal rate was 94% in the second quarter, which registers at the high end of the company’s historical range of 92% to 94%.

Hardware and other revenue in the second quarter was $39.3 million, up 17.3%. The increase in hardware revenue was primarily due to an increase in sales of video cameras, as the company continues to see increasing adoption of video by both new and existing subscribers.

“For the first six months of the year, the number of subscribers electing a video service plan is up about 40% from the first half of 2018,” President and CEO Steve Trundle said during an earnings call. “Adoption of our video analytics service, which we initially released at the end of last year, continues to grow as well. The improved user experience and quality of service enabled by video analytics is driving increased overall demand for video.”

During the second quarter the company expanded its integration with leading security panel makers to enable authorized dealers deliver’s services to a broader range of residential and commercial customers.

The new panels include flagship products with touch-screen capabilities from Nortek, DSC, Interlogix and Qolsys. In the U.S., all of the security panels in’s ecosystem now offer LTE dual-path communications gateways. also added Z-Wave Plus devices from Cooper Eaton and Leviton to expand its selection of automation and lighting hardware with brands recognized in the home builder industry.

“We also worked with our manufacturer partners to increase the number of partitions and zones supported on several control panels. This upgrade allows the control panel to better meet the needs of small and medium-sized business owners and light commercial applications,” Trundle said during the earnings call. “An important element of our product strategy for security control panels has been cellular communications and managing the sunset of the 3G networks that is planned for 2022.”

Total cash and cash equivalents was $150.9 million at the end of the second quarter, up from $122.4 million at the end of the first quarter. This total includes a $7.4 million payment received related to a promissory note with a hardware supplier.

Operating cash flow was $22.9 million, up from $11.7 million in the prior-year period. Free cash flow was $21.3 million, up from $8.6 million in the prior-year period.

The company raised its guidance for total revenue for 2019 to $460.2 million to $465.7 million, up from the prior guidance of $447.3 million to $454.2 million. The revision upward includes increased guidance for hardware and other revenue of $127 to $132 million. expects full-year earnings in the range of $1.39 to $1.41 per share, with revenue in the range of $460.2 million to $465.7 million.

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